Procurement for
Housing Conference
Delivering More Value
for Less Money
Roy Irwin
The Coalition Government's agenda
for local services
• More localism
• More local accountability
• More local data
• More output
• More local decision making
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The Coalition Government's agenda
for local services
• Less regulation and formal scrutiny
• Less guidance
• Less national/regional apparatus and frameworks
• Less cost
• Less resources
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The Challenges in Improving Economy,
Efficiency and Effectiveness (1)
• Less Resources
– Rents
– Housing Benefit
– Public capital
• Sensitivity of Business Plans to changes in
income flows
• HRA Reform
• Lender confidence in sector stability
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The Challenges in Improving Economy,
Efficiency and Effectiveness (2)
• Different and differentiated information flows
• Less national data on performance, outputs and
outcomes
• More local data on transaction values
• More local discretion on non-financial
information
• Less external validation of data accuracy
• Less direction on data consistency
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The TSA Value for Money standard
In meeting all standards, registered providers shall have a
comprehensive approach to managing their resources
and demonstrate to their tenants:
• how expenditure has been prioritised in relation to each
of the standards and in the delivery of local offers, and in
meeting other needs such as investment in new social
housing provision
• how they have ensured value for money has been
secured and tested
• plans and priorities for delivery of further value for
money improvements
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So, how well are providers doing?
The Challenges:
• Value for money is not fully embedded throughout all
organisations. There is not always a comprehensive
approach to delivering VfM.
• Procurement arrangements are not always well
understood to achieve maximise value for money and
comply with legislation.
• Tenants are not routinely involved in managing value for
money. Issues that are important to them may be missed
and not targeted for improvement.
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How are well are housing associations
doing on Short Notice Inspections?
SNI inspection results 09/10 •VfM is a cross cutting theme
100%
•In 41% of Short Notice
90%
Inspections (SNIs)
80%
70%
3 - Strengths
considerably outweigh
weaknesses outweighed
weaknesses
60%
2 - Strengths outweigh strengths in Value for Money.
weaknesses
50%
1 - Strengths and •This compares to 28%
weaknesses are in
40%
balance across all other services
0 - Weaknesses
30%
outweigh strengths
20%
10%
0%
VfM All areas inspected
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A review of collaborative procurement
across the public sector (1)
AC/NAO study May 2010
Adopt a strategic approach to procurement
– Observe the law
– Identify unique categories of procurement
– Manage procurement in the best place for
your organisation
– Actively manage end user specifications and
brand choices to bring greater
standardisation on common procurements
– Measure savings achieved
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A review of collaborative procurement
across the public sector. (2)
AC/NAO study May 2010
Explore the case for collaboration
– Exploit the potential benefits of volume – low
prices
– Use price information to challenge suppliers -
better comparison of unit costs
– Collaboration results in fewer tendering
exercises, leading to lower administrative
costs
– Allows the provider time to concentrate on
unique specialised purchases
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‘Tenant involvement: Assessing
landlords’ progress’ AC/TSA study (March 2010)
Tenant involvement is vital to prevent
negative impacts to services when
reducing costs.
Inspections have consistently found a
direct connection between effective
resident involvement and improved
services and value for money.
Tenant involvement is an important key to
continuous improvement.
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Housing association procurement.
AC study 2007
• assess housing associations’ use of modern
procurement methods;
• help smaller housing associations to improve
their approach to effective procurement; and
• assess the residents contribution to housing
association procurement.
And our scope was:
– Housing associations > 250 units
– Repairs and maintenance, and housing management
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Scope to do more.
Annual efficiency
Potential annual
gains through
Number of HAs in savings if all
Stock size procurement
this stock range adopt this
achieved by top
approach
performer
250-2499 237,000 254 60m
2500-4999 337,000 150 51m
5000-7499 597,000 65 39m
7500-9999 371,000 24 9m
10000-19999 1,734,000 32 55m
20000+ 1,819,000 8 15m
Total 229m
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Associations that use procurement
effectively have:
1. A procurement strategy 7. Competitive neutrality / a mixed
2. Procurement training for all staff economy of provision
3. Explicit use of procurement to 8. Critical appraisal of the costs and
achieve policy objectives benefits of procurement options
4. Measurement of procurement 9. Procurement methods and
performance approaches that are
5. Resident involvement in proportionate and appropriate to
commissioning and procurement their requirements.
6. Systems for addressing issues
of equalities and diversity in 10.A strong driver – business plan,
procurement inspection report, corporate
direction
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Surviving the Crunch - Local finances in
the recession and beyond AC study March 2010
• Prepare now for the leaner times ahead;
• Develop a detailed understanding, using scenario planning, of how
different levels of income affect financial resilience;
• Ensure that members and officers provide strong leadership over difficult
resource allocation decisions;
• Engage early with staff and the public about options for coping with
shrinking resources;
• Develop rolling medium and longer-term financial plans despite the
uncertainties.
• Plans to meet estimated budget gaps should combine basic efficiency
measures with more ambitious options to transform service delivery and
manage demand;
• Ensure there is capacity for financial planning and change-management.
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Can tenants help?
• Highlight areas of the service which are inefficient or
ineffective – what needs to be improved?
• Set priorities for spending – what is most needed?
• Highlight areas of waste – what could be reduced?
• Set targets and performance standards – what represents a
good service?
• Monitor the quality of external contractors through feedback
–what is the service really like?
• Shape new services and redesign existing ones
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Providers perform very well when there
is…
• A shared vision with partners and stakeholders on what would constitute
success for the organisation and the people and places it serves
• Leadership that focuses on continuous improvement, and makes the
decisions necessary to achieve it;
• Effective and simple performance management frameworks that support
organisational priorities and are linked to policy and resources
• Clear people management strategies that harness staff energies and skills
to deliver objectives
• In house capacity is built upon through a robust approach to procurement
and partnering
• A good understanding of the local context and the diversity within local
communities in order to identify and meet the needs of those communities
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They look at the design of products and
services from the outside.
• Accessibility How easy is it for customers to find and engage
• with the organisation?
• Affordability Are costs and prices understood and justifiable
– internally and externally?
• Choice One size for all or bespoke?
• Clarity Is your “offer” clear, yes, no or maybe…?
• Deliverability Is your word your promise or it depends…?
• Openness How do you demonstrate your accountability and to whom?
• Suitability Is diversity understood, respected and responded to?
• Timeliness Appropriate, flexible, cost effective?
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Delivering Value for Money.
• What’s needed?
• A focus of VFM across the organisation, with clear leadership to drive the
agenda
• Staff understanding of VFM – from caretakers, housing officers to the
CEx…
• Not just finance – VFM is integral to all aspects of service planning and
delivery
• Spending priorities reflect policy and improvement agenda and take
account of VFM
• A cost effective approach to procurement
• Resources are invested in priorities agreed with tenants
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If you can bring all this together, you
will deliver more for less.
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•Thanks for listening
•Any Questions?
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